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South Korea’s Emart set to scale back in Vietnam

South Korean supermarket chain Emart looks likely to quit Vietnam due to the face of regulatory hurdles, according to South Korean news media reports.

Emart, owned by Shinsegae, launched its first store in Vietnam in December 2015 in the Go Vap District of Ho Chi Minh City. Five years later, the company still has just the one store, but Emart said it has maintained a high growth rate. The South Korean hypermarket chain said last December that it would open a second store this year, however while it has bought a site in the city, the project has been delayed due to licensing setbacks.

South Korean observers suggest Emart’s struggle in expanding its Vietnam network results from the decision to operate as a wholly owned Vietnamese company, rather than as a joint venture with a foreign company, the favoured path into the market, giving local companies a share of the action.

A source from the industry said that Emart needs at least 10 outlets in order to have bargaining power with vendors and achieve logistics efficiency.

An Emart representative denied the company will leave Vietnam, saying it is looking into other options such as strategic alliance or business partnership.

If the company decides to quit, Vietnam will become the second major Asian market that the supermarket chain has pulled out from after China.

As it experiences slow growth in Asia, Emart is eyeing the US as a new opportunity. The supermarket’s overseas sales rose 122 per cent year on year, largely due to its US subsidiary Good Food Holdings, which now accounts for 93 per cent of its offshore sales.

Emart aims to invest US$77.3 million through 2022 to expand its US footprint.

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